The 30-year old RESPA rule
has seen minor amendments over the years, but as
of January 2010 the Department of Housing and
Administration is ushering in sweeping reforms
that will dramatically change the way lenders
and title companies conduct business and the way
attorneys represent clients.

HUD’s goal with the reform
rule was to make the borrowing and closing
process more transparent to allow consumers to
have a better understanding so that they could
shop for the best possible loan and settlement
services.

Two revised forms have come
out of the reform: as of January 1, 2010, a
3-page Good Faith Estimate (GFE) and a 3-page
HUD-1 settlement statement will be required on
all loans that are covered by RESPA.The new forms are different, but the
major change affecting the lending community is
that certain items estimated on the GFE cannot
change, not even by one penny, when it comes to
the closing statement.These items fall within HUD’s new “zero
tolerance” bucket.

A group of fees will be
allowed to change but only by 10% (the 10%
tolerance bucket). Understanding the tolerance
buckets will be critical to attorneys
representing buyers.

SEMINAR

We will spend time reviewing
the revised HUD-1 and GFE so that you will have
a comfort level explaining fees and loan terms
at the closing table.No longer will the items listed on the
HUD add up to fees being charged to the buyers,
but there are ways for you to make certain your
clients are properly charged.

Old Republic Title Update is published by the Mid-Atlantic Area Office of Old Republic National Title Insurance Company in an effort to provide information relative to our industry on a timely basis. None of the materials included in this publication should be deemed legal or underwriting advice or should be acted upon without prior consultation with your underwriter or counsel./font>